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News

December 19, 2014,
Article

Article

AdExchanger: The Year in Native Advertising

Read on AdExchangerIf banner advertising has peaked, native advertising is still on its way up. Proponents of native cite better consumer engagement and higher rates for publishers.London-based market research firm Mintel pegged the current native advertising market at $1.8 billion, predicting it will rise to $9.4 billion by 2018.

Of course, “native” is a broad term that, according to the IAB, encompasses in-feed ad units as well as brand-sponsored posts.

“In 2015, we will begin to see stiffer competition and perhaps even a shakeout of the less effective partners,” said Peter Minnium, head of brand initiatives of the IAB. “Measurement will evolve from what, at present, looks more like a smorgasbord than a composed dish – there are many good metrics standing alone (e.g., time spent, opens, shares) but very few holistic models.”

“Publishers are refactoring their website designs to support responsive design,” said Eric Picard, VP for strategic partnerships at MediaMath. “Smart publishers will think about what this means for custom ads, native ads and flexible ad placements (where the best size for the publisher’s yield shows up, and the page refactors around the ad format).”

Here are AdExchanger’s highlights for the year in native advertising:

Content Recommendation Engines

Content recommendation engines’ ubiquity led to heightened competition and consolidation in 2014.

January: AOL acquired Gravity, and plans to use its technology not just for content recommendation, but to personalize content for AOL users.

August: Taboola showed signs of diversifying when it acquired Perfect Market, which offers product recommendation ads. “Taboola will continue to focus on full-page personalization” in 2015, CEO Adam Singolda said. With mobile accounting for half of all traffic, “we will continue to invest in bringing unorthodox solutions and products to the mobile environment.”

“Old guards like The New York Times and Wall Street Journal finally entered the game, cementing native advertising’s status as not just a ‘hot buzzword’, but as smart monetization strategy for publishers and effective marketing strategy for brands,” said Tessa Gould, VP of ad innovation and monetization for BuzzFeed, reflecting on the changes in the past year.

BuzzFeed will focus on bringing branded content to video next year, replicating the success of “Dear Kitten” for Purina’s Friskies (18 million YouTube views and counting).

However, as native advertising gains prominence, regulators are taking notice. The FTC plans on releasing guidelines for the format next year.

Here are some highlights from the year in branded content:

Slate Custom: Lindsay Nelson (since hired away by Vox) talked about how native makes sense with a format most still struggle with: mobile. “Time spent on page is strongest on mobile,” she said. “There is a big opportunity on mobile for native.”

Washington Post: “When you move into content marketing, it’s a whole different conversation than standard display advertising,” director of ad innovations Kelly Andresen said. “A click-through rate is not going to tell you a story of how well your native campaign performed.

Quartz:“We take cues from editorial,” VP of advertising and strategy Joy Robins said. “What we see perform well, we apply to the native content pieces we do.”

Huffington Post: “Not only do we have this organic scale and reach [of 4 million home page views a day], if an advertiser wants further reach, we can syndicate content through AOL-owned and operated properties,” said HuffPost Partner Studio’s Tessa Gould (now at BuzzFeed).

In-Feed Ads

If any part of native will go programmatic, it’s in-feed ads.

“Native ads sold over programmatic is here now, but very nascent,” said Picard. “The new Open RTB specifications include support for native, and this will lead to much broader adoption once the new spec is rolled out and incorporated into the ad platforms.”